Management presentation Q results

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1 Management presentation Q results Christoph Vilanek, CEO and Joachim Preisig, CFO 11 August 2016 Analyst and Investor conference call 1 Management presentation Q results 11 August 2016

2 Cautionary statement This presentation contains forward-looking statements which involve risks and uncertainties. The actual performance, results and timing of the business of freenet AG could differ materially from the expectations regarding performance, results and timing expressed in this presentation. This presentation does not constitute an offer to sell or a solicitation to purchase any securities of freenet AG. Any such decision must not be made on the basis of the information provided in this presentation. freenet AG does not undertake any obligation to publicly update or revise information provided during this presentation. 2 Management presentation Q results 11 August 2016

3 Key achievements in Q Significant growth in Customer Ownership by 50,000 in Q (+313,000 yoy) mainly driven by strong increase of valuable postpaid customers by 39,000 (+232,000 yoy) Continued stabilisation of postpaid ARPU currently at 21.4 euros and stable yoy; slight decrease of 0.1 euros compared to Q because of seasonal effects Revenue at million euros (previous year: million euros) based on stable mobile communications business, higher valuable Digital Lifestyle revenue and revenue contribution from the new segment TV and Media EBITDA increased by 15.7 million euros yoy to million euros Free cash flow rose yoy by 56.5 per cent to million euros includes dividend payment of 30.1 m of Sunrise Communications Group AG 3 Management presentation Q results 11 August 2016

4 Further growth in Customer Ownership (+3.4 per cent) [in million] Q Q Q Q Q Postpaid No frills Customer Ownership Improvement of customer ownership driven by disproportionate increase of postpaid customers by 3.8 per cent (+232,000 yoy) and an increase of the no-frills customer base by 2.8 per cent (+81,000 yoy) Decline of prepaid customer base to 2.67 million as a result of further deactivation of inactive SIM-Cards Total customer base at million below previous years figure of million 4 Management presentation Q results 11 August 2016

5 ARPU stabilisation confirms focus on valuable customer relations [EUR/month] Q Q Q to Q Q to Q Q to Q Q to Q Q to Q Q to Q Q to Q No frills Prepaid Postpaid ARPU At 21.4 euros on the same level as previous year Data revenue share at 33.80% No frills ARPU At 2.4 euros on par with Q1 2016, Q and Q Prepaid ARPU Increased by 0.2 euros compared to previous quarter, slightly outperforming the previous years figure 5 Management presentation Q results 11 August 2016

6 Core business continues to perform according to our internal plan Channels Tariffs DLS Digital lifestyle Brand Overall satisfying performance in all channels concerning gross adds and renewals Year-on-year increase in brick and mortar with 50/50 share of new and existing customers Online very price sensitive due to ongoing competition of other MVNO players Subsidy business driven by Samsung product launches and attractive bundles Stepwise increase of included data volume with all three networks LTE available in all networks, maximum speed in Telefonica LTE due to merger remedy Most attractive SIM-only offers in Vodafone network via freenet mobile brand New products launches in content offerings e.g. flat rate for more than 1,600 magazines Prelaunch testing of IPTV product with promising results Overall positive performance in accordance with internal planning Prompted brand recognition above 80% and more than 40% of those that remember the advertising and or the brand recognise mobilcom-debitel as more than a mobile phone service provider 6 Management presentation Q results 11 August 2016

DVB-T2 preparation goes with full speed 38 out of 61 DVB-T2 locations in pilot operation up and running 6 channels in full HD transmission running Coverage of 24 million users via room antenna and 55

7 DVB-T2 preparation goes with full speed 38 out of 61 DVB-T2 locations in pilot operation up and running 6 channels in full HD transmission running Coverage of 24 million users via room antenna and 55 million via roof antenna freenet TV connect (HbbTV based on demand platform) in beta testing 13 vendors contracted for set top boxes, current supply chain forecast above 3.3 million units, C+ module bundling with 2 TV brands Listing in all relevant retail and online stores Pre IFA press event with very positive feedback mid July; full scale booth at IFA in the 2 nd week of September in Berlin 7 Management presentation Q results 11 August 2016

IPTV platform about to launch in September Nationwide Beta test running since mid May, currently around 1,000 users App approved by Google Play store and Apple App store Contracts with relevant

8 IPTV platform about to launch in September Nationwide Beta test running since mid May, currently around 1,000 users App approved by Google Play store and Apple App store Contracts with relevant content providers signed, about 100 channels planned in Q4 Peering contracts signed with Deutsche Telekom, Vodafone/KDG, Liberty Media, O2, and other major ISPs, covering 22 millions potential households in fixed line Final feature set for launch will comprise Smartphone Apps for IOS and Android, TV Cast version based on Google Cast technology, net PVR, time-shift, personalised recommendation, comfort Electronic Programme Guide (EPG)... Commercial launch planned in Q Management presentation Q results 11 August 2016

9 Shareholding in Sunrise Communications Group AG Shareholding in Sunrise increased by 0.73% (former Sunrise Management shares) - from 23.83% to actually 24.56% in April 2016 Sunrise dividend pay-out Cash inflow of 30.1 million euros in April 2016; resulting in an increase of operating cash flow and free cash flow Promising comprehensive business model Digital TV, Internet, Mobile and Landline network Multiple-brand strategy (B2B and B2C) with focus on customer service Continuous product development and innovations by expanding partnerships in all business areas 9 Management presentation Q results 11 August 2016

10 Financial statements Income statement [in EUR million] 1 st half st half 2015 Q Q Revenue 1, , Gross profit EBITDA Depreciation and amortisation EBIT Interest result EBT Taxes on income Group result Earnings per share ( ) Revenue improved by 55.1 m due to stable mobile communications business, rise in valuable DLS revenue and contribution from new segment TV and Media Depreciation and amortisation increased by 16.4 m yoy mainly as a result of the increase in property, plant and equipment and intangible assets related to the recent transactions (Media Broadcast and EXARING) and the associated purchase price allocations. Increase of interest expenses by 11.6 m mainly attributable to noncurrent liabilities of Media Broadcast and the refinancing in connection with the recent acquisitions in March Management presentation Q results 11 August 2016

11 Key performance indicators and segment overview [in EUR million] Revenue Gross profit EBITDA Free cash flow +3.7% +9.1% +10.8% +32.6% Group 1, , % +0.1% +3.2% 1,473.6 Mobile 1, TV and Media st half st half ) Including proceeds from Sunrise 6.1 m 11 Management presentation Q results 11 August 2016

12 Financial statements Balance sheet [in EUR million] Assets Shareholders equity and liabilities Intangible assets 1, ,273.9 Shareholders' equity 1, , ,250.1 Goodwill Trade accounts receivable Cash and cash equivalents Other assets 1, , ,278.9 Total 4, , Borrowings Trade accounts payable Other liabilities 1, ,278.9 Total 4,608.3 Equity ratio at 29.8 per cent as of 30 June 2016 (31.0 per cent as of 31 March 2016) 12 Management presentation Q results 11 August 2016

13 Current debt ratio inside the target range between [in EUR million] Debt ratio Net debt ) Net debt is defined as financial debt minus cash and cash equivalents minus market value of freenet s share in Sunrise Communication Group AG on the reference date (stock market price = closing price according to Frankfurt stock exchange on the reference date). 2) Debt ratio is defined as net debt divided by the EBITDA of the last twelve months. 13 Management presentation Q results 11 August 2016

14 Financial statements Cash flow [in EUR million] Cash flow from operating activities 1 st half st half 2015 Q Q Cash flow from investing activities at m mainly due to pay out of 22.1 m for a further share capital of 0.73 per cent in Sunrise. Cash flow from investing activities thereof net capex Cash flow from financing activities Change in cash and cash equivalents Free cash flow Cash flow from financing activities Dividend payout rose by 6.4 m from m to m yoy; repayment of the bond with (nominal value of m plus related expired interests); Net-Cash inflow of m from borrowings. As a result free cash flow increased by 41.8 m yoy 1) Free cash flow is defined as cash flow from operating activities, minus investments in property, plant and equipment and intangible assets, plus proceeds from the disposal of property, plant and equipment and intangible assets. 14 Management presentation Q results 11 August 2016

15 Detailed Bridge from EBITDA to free cash flow Q1 Q [in EUR million] EBITDA Change in net working capital Tax payments Capex Sunrise EBITDA (no cash) Sunrise dividends Other Free cash flow FY FY 2016e > Management presentation Q results 11 August 2016

16 Guidance 2016 confirmed and clear dividend pay out statement Customer ownership Postpaid ARPU Group revenue Group EBITDA Free cash flow (FCF) 1 Dividend pay out Guidance 2016 > m ² ~300.0 m /share 4 Results , ,117.9 m m m 1.55 /share 5 Guidance m 280 m 50-75% of FCF 1) Free cash flow is defined as cash flow from operating activities, minus investments in property, plant and equipment and intangible assets, plus proceeds from the disposal of property, plant and equipment and intangible assets. 2) As before, we assume that the consolidation of the Sunrise-shares will lead proportionally in the financial year 2016 to additional EBITDA of around 10 million 3) Dividend payment of 30.1 m from Sunrise Communications Group AG are not included. 4) Dividend of 1.60 euros per dividend-bearing share for the financial year 2016 to be proposed by the Executive Board 5) Dividend of 1.55 euros per dividend-bearing share resolved by the Annual General Meeting on 12 May Management presentation Q results 11 August 2016

Marketing and Media 1991-2001 Joachim Preisig, CFO CFO of freenet AG since 2010 CFO of debitel AG since 2006 CFO of T-Mobile/

17 freenet Group management We take time for your questions Christoph Vilanek, CEO CEO of freenet AG since 2009 Management positions at debitel AG since 2005 Consultant for telecommunication with McKinsey&Company since 2001 Management positions in Direct Marketing and Media Joachim Preisig, CFO CFO of freenet AG since 2010 CFO of debitel AG since 2006 CFO of T-Mobile/ Head of Group Controlling at Deutsche Telekom AG since 2002 CFO at O 2 since Management presentation Q results 11 August 2016

18 Thank you. Hollerstrasse 126 Investor Relations Büdelsdorf +49 (0) Management presentation Q results 11 August 2016

19 BACK UP 19 Management presentation Q results 11 August 2016

20 Shareholder structure Major shareholders of freenet AG As of 11 August % Other shareholders/freefloat** 5.55% 5.16% 3.70% Flossbach von Storch AG * Allianz Global Investors Europe GmbH* The Capital Group Companies, Inc.* * Including attributions according to German Securities Trading Act 89.29% 20 Management presentation Q results 11 August 2016

21 Refinancing against the background of the acquisitions [in EUR million] Promissory notes 2015 tranche 1 (fix) tranche 2 (fix) tranche 3 (var.) Volume Interest rate p.a. 1.79% 1.33% 1.05% Maturity Promissory notes 2016 tranche 1 (fix) tranche 2 (var.) tranche 3 (fix) tranche 4 (var.) tranche 5 (fix) Bank loan 2016 (Facilities Agreement ) tranche 1 (var.) tranche 2 (var.) tranche 3 (var.) Volume Interest rate p.a. 1.03% 1.00% 1.45% 1.20% 1.95% Maturity Volume Interest rate p.a. 0.80% 2.10% 1.80% Maturity Management presentation Q results 11 August 2016

Management Presentation Q results

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